Lim Swee Khiang v Borden Co: Minority Shareholder Oppression & Company Affairs

In Lim Swee Khiang and Another v Borden Co (Pte) Ltd and Others, the High Court of Singapore dismissed an action brought by minority shareholders Lim Swee Khiang and C.H. Lim Pte Ltd against Borden Co (Pte) Ltd and other majority shareholders. The plaintiffs alleged oppressive conduct in the management of Borden's affairs, particularly concerning licensing agreements with PT Eagle and the removal of Lim Swee Khiang as an executive director. The court, presided over by Judith Prakash J, found insufficient evidence of oppression or disregard of the minority shareholders' interests and deemed the action an abuse of process, especially given the defendants' reasonable offer to purchase the plaintiffs' shares. The court dismissed the action with costs.

1. Case Overview

1.1 Court

High Court

1.2 Outcome

Action dismissed with costs to all the defendants.

1.3 Case Type

Civil

1.4 Judgment Type

Grounds of Decision

1.5 Jurisdiction

Singapore

1.6 Description

Minority shareholders Lim Swee Khiang and C.H. Lim Pte Ltd allege oppression by Borden Co's majority shareholders. The court dismissed the action, finding no oppression.

1.7 Decision Date

31 July 2005

2. Parties and Outcomes

Party Name	Role	Type	Outcome	Outcome Type	Counsels
Lim Swee Khiang	Plaintiff	Individual	Claim Dismissed	Lost	Sean La’Brooy of Rodyk and Davidson Lok Vi Ming of Rodyk and Davidson Joanna Foong of Rodyk and Davidson
Borden Co (Pte) Ltd	Defendant	Corporation	Judgment for Defendant	Won	Justin Yip of Drew and Napier LLC
Tan Lak Tho	Defendant	Individual	Judgment for Defendant	Won	Foo Say Tun of Wee Tay and Lim
Lim Kha Eng alias Mengalina Halim	Defendant	Individual	Judgment for Defendant	Won	Alvin Tan of Wong Thomas and Leong
Chew Joo Kiang Rachel	Defendant	Individual	Judgment for Defendant	Won	Foo Say Tun of Wee Tay and Lim
Yeo Siew Khoon	Defendant	Individual	Judgment for Defendant	Won	Foo Say Tun of Wee Tay and Lim
Yeo Yong Kian	Defendant	Individual	Judgment for Defendant	Won	Foo Say Tun of Wee Tay and Lim
Ong Kim Gek	Defendant	Individual	Judgment for Defendant	Won	Paul Ng of Rajah and Tann Lionel Tay of Rajah and Tann
Lim Kheng Puan	Defendant	Individual	Judgment for Defendant	Won
C.H. Lim Pte Ltd	Plaintiff	Corporation	Claim Dismissed	Lost	Sean La’Brooy of Rodyk and Davidson Lok Vi Ming of Rodyk and Davidson Joanna Foong of Rodyk and Davidson
Yeo Swee Tee and Tan Lak Tho	Defendant	Individual	Judgment for Defendant	Won	Foo Say Tun of Wee Tay and Lim
Yeo Siew Khoon and Yeo Yong Kian	Defendant	Individual	Judgment for Defendant	Won	Foo Say Tun of Wee Tay and Lim

3. Judges

Judge Name	Title	Delivered Judgment
Judith Prakash	Judge	Yes

4. Counsels

Counsel Name	Organization
Sean La’Brooy	Rodyk and Davidson
Lok Vi Ming	Rodyk and Davidson
Joanna Foong	Rodyk and Davidson
Justin Yip	Drew and Napier LLC
Foo Say Tun	Wee Tay and Lim
Alvin Tan	Wong Thomas and Leong
Paul Ng	Rajah and Tann
Lionel Tay	Rajah and Tann

4. Facts

Lim Swee Khiang and C.H. Lim Pte Ltd held a 27% minority interest in Borden Company (Private) Limited.
Borden was established in 1960 to manufacture medicinal and pharmaceutical products, notably Eagle oil.
Mdm Halim was a commissioner of PT Eagle, a company competing with Borden.
SK Lim was removed as an executive director of Borden in November 2001.
The defendants made an offer to purchase the plaintiffs’ shares in Borden.
The plaintiffs rejected the offer to purchase their shares and sought to wind up Borden.
PT Eagle was authorized by Borden to use its trade mark in Indonesia.

5. Formal Citations

Lim Swee Khiang and Another v Borden Co (Pte) Ltd and Others, OS 1268/2002, [2005] SGHC 135

6. Timeline

Date	Event
1960-01-01	Borden was set up to manufacture medicinal and pharmaceutical products.
1970-01-01	Chew Jin Sian died, leaving his 20% shareholding in Borden to his widow, Mdm Halim.
1973-01-01	PT Eagle was established.
1975-02-01	Borden authorized PT Eagle to use the name of Wilhelm Hauffmann & Company.
1980-01-01	PT Eagle began selling Eagle oil in the Malaysian market.
1995-01-01	Edy Chew became general manager of Borden.
1997-01-01	Edy Chew left Borden.
1997-05-01	CH Lim was removed as a director of Borden.
1999-09-01	Borden complained to the Malaysian Ministry of Health that PT Eagle was infringing its trade mark in Malaysia.
1999-09-09	Plaintiffs attended a shareholders’ meeting and agreed with a suggestion that Mdm Halim be replaced as a director by SK Lim with immediate effect.
1999-11-01	PT Eagle filed an originating motion in the High Court in Kuala Lumpur to obtain a cancellation of Borden’s trade mark in Malaysia.
1999-01-01	SK Lim was appointed an executive director.
2000-07-01	PT Eagle’s action was dismissed for procedural reasons but it filed an appeal.
2000-09-20	Board meeting considered the issue of whether there was any breach of duty or abuse of power on the part of Mdm Halim.
2001-09-17	Indonesian solicitors advised that their searches showed that Mdm Halim had been commissioner of the company since its formation and still retained this position.
2001-10-05	Drew & Napier advised that the licence agreement with PT Eagle should be terminated without further delay.
2001-10-19	Mdm Halim made a requisition for an extraordinary general meeting to be held to pass a resolution that all members of the board of directors not hold executive positions in the company.
2001-11-09	Extraordinary general meeting of Borden was held.
2001-11-09	SK Lim was removed as executive director of Borden.
2001-11-13	Richard Yeo sent a letter to SK Lim’s solicitors stating that SK Lim had been re-designated as a non-executive director and should hand over the “necessary documents” of Borden as soon as possible.
2001-11-20	Meetings were held at Drew & Napier’s office.
2001-12-07	The second plaintiff sent Borden a letter asking whether Borden had taken any steps to follow up on the issue of Mdm Halim’s position as commissioner of PT Eagle and on the termination of the licence.
2001-12-27	A further discussion on this trade mark matter took place at the directors’ meeting.
2002-01-16	Another chaser was sent.
2002-01-28	Board meeting was held.
2002-01-01	Christopher Yeo was appointed as managing director having executive powers.
2002-03-01	Drew & Napier advised that there were three options available to Borden.
2002-04-29	Extraordinary general meeting was held to discuss the status of the Malaysian proceedings.
2002-05-06	Malaysian solicitors advised that the documents sent did not advance the case in Borden’s favour.
2002-06-06	Extraordinary general meeting was held.
2002-09-09	Action commenced as an originating summons.
2002-09-10	An injunction was granted restraining the defendants from convening the annual general meeting scheduled for 11 September 2002 and for convening or proceeding with any other meeting to retire or remove SK Lim as a director of Borden.
2003-12-18	At the annual general meeting, the defendants approved payment of this settlement sum.
2004-02-01	The settlement agreement was signed.
2004-06-01	The proceedings were converted into a writ action.
2004-08-17	The plaintiffs filed their Statement of Claim.
2004-11-04	Mdm Halim’s solicitors wrote to the plaintiffs’ solicitors offering to purchase the shares based on a price-fixing formula.
2004-11-22	The trial started.
2004-11-29	Mdm Halim applied to amend her Defence by adding an averment to the effect that a reasonable offer to purchase the plaintiffs’ shares had been made.
2004-11-30	The plaintiffs amended their Statement of Claim by deleting the alternative prayer that asked the court to order the defendants to purchase the plaintiffs’ shares.
2005-08-01	Judgment was delivered.

7. Legal Issues

Oppression of Minority Shareholders
- Outcome: The court found insufficient evidence to establish that the affairs of the company were conducted in a manner oppressive to the minority shareholders or in disregard of their interests.
- Category: Substantive
- Sub-Issues:
  - Disregard of minority shareholder interests
  - Unfair exercise of directors' powers
Abuse of Process
- Outcome: The court determined that the plaintiffs' refusal to accept a reasonable offer for their shares and their insistence on winding up the company constituted an abuse of process.
- Category: Procedural
- Sub-Issues:
  - Refusal of reasonable buyout offer
  - Maintenance of action despite reasonable offer
Conflict of Interest
- Outcome: The court found that while Mdm Halim held a position as commissioner in a competing company, the plaintiffs failed to establish any specific act demonstrating a conflict of interest that prejudiced Borden.
- Category: Substantive
- Sub-Issues:
  - Director's role in competing company
  - Failure to disclose conflict

8. Remedies Sought

Winding up of Borden
Order for defendants to purchase plaintiffs' shares (initially)

9. Cause of Actions

Oppression of minority shareholders

10. Practice Areas

Commercial Litigation
Corporate Law

11. Industries

Pharmaceuticals

12. Cited Cases

Case Name	Court	Affirmed	Citation	Jurisdiction	Significance
Bansal Hemant Govindprasad v Central Bank of India	Court of Appeal	Yes	[2003] 2 SLR 33	Singapore	Cited for the principle that a submission of no case to answer could succeed if either the plaintiff’s evidence at face value did not establish a case in law or the evidence led by the plaintiff was so unsatisfactory or unreliable that his burden of proof had not been discharged.
Scottish Co-operative Wholesale Society Ltd v Meyer	N/A	Yes	[1959] AC 324	England and Wales	Cited for the definition of 'oppression' as the exercise of authority in a manner which was burdensome, harsh and wrongful.
Re Jermyn Street Turkish Baths Ltd	English Court of Appeal	Yes	[1971] 1 WLR 1042	England and Wales	Cited for the definition of oppression in the context of company law, focusing on the unfair exercise of dominant power by shareholders.
Low Peng Boon v Low Janie	Court of Appeal	Yes	[1999] 1 SLR 761	Singapore	Cited for approving the definition of oppression as set out in Re Jermyn Street Turkish Baths Ltd.
Re Kong Thai Sawmill (Miri) Sdn Bhd	Privy Council	Yes	[1978] 2 MLJ 227	N/A	Cited for the principle that mere disagreement with management decisions is insufficient to establish oppression; there must be a visible departure from fair dealing.
Elder v. Elder & Watson Ltd	N/A	Yes	Elder v. Elder & Watson Ltd	N/A	Cited for the principle that there must be a visible departure from the standards of fair dealing and a violation of the conditions of fair play which a shareholder is entitled to expect before a case of oppression can be made.
Thompson v. Drysdale	N/A	Yes	Thompson v. Drysdale	N/A	Cited for the principle that 'disregard' involves something more than a failure to take account of the minority’s interest: there must be awareness of that interest and an evident decision to override it or brush it aside or to set at naught the proper company procedure.
O’Neill v Phillips	House of Lords	Yes	[1999] 1 WLR 1092	England and Wales	Cited for the principle that an action for oppression cannot be sustained where there is a reasonable offer to purchase the allegedly oppressed party’s shares.
Re a company (No 003843 of 1986)	N/A	Yes	[1987] BCLC 562	England and Wales	Cited for the principle that it is manifestly unreasonable for petitioners to continue to press for a winding-up order when a fair offer has been made to purchase their shares.

13. Applicable Rules

Rule Name
No applicable rules

14. Applicable Statutes

Statute Name	Jurisdiction
Section 216 Companies Act (Cap 50, 1994 Rev Ed)	Singapore

15. Key Terms and Keywords

15.1 Key Terms

Oppression
Minority shareholders
Borden Company (Private) Limited
PT Eagle Indo Pharma
Eagle oil
Conflict of interest
Abuse of process
Reasonable offer
Winding up
Executive director

15.2 Keywords

minority shareholder oppression
company affairs
Borden
PT Eagle
winding up
Singapore
High Court

17. Areas of Law

Area Name	Relevance Score
Minority Oppression	85
Company Law	75
Winding Up	65
Civil Procedure	60

16. Subjects

Company Law
Shareholder Rights
Civil Litigation